‘Digitization’ is the latest hot topic of interest among the executives of most of the banks. It has emerged as the key business trend in the banking industry, inspired by the success of the digital natives like Google, Amazon, and Netflix. Every bank wants to be a digital bank and IT is expected to drive the change. But, is not IT the digital arm of a bank? Infact, IT has been driving the business for many decades now. Banks and financial services companies are recognized as the early pioneers in the adoption of IT. Customers have been using online banking services for more than a decade now. Services like bill payments and money transfers are very common for quite some time. This raises the question – Is digitization new to banking?
Before answering the question, let us understand where companies are digitizing of late. Some of the common use cases are analytics in sales and marketing, analytics in gaining customer insights, real time business intelligence, IT driven new products and services, co-creation and self-service with customers, and in offering more services online and through mobile. In a way more and more processes are getting digitized. This is no different from what was happening before and IT has always been driving such changes in banks. So, can we conclude that digitization is not new to banking? Probably not.
While digitization is not new, the current wave of digitization is about leveraging the emerging technologies to massively scale operations, process more data, automate more business processes and offer more convenience for customers – exponential raise in speed, scale, smartness, and scope of IT in driving the business. The key to this change is the innovation mindset! IT executives must realize that the current wave of digitization is about IT led innovation. Innovation is what is driving the digitization efforts today.
Most often innovation generates a lot of buzz within the IT organization. Leaders urge their teams to focus more on innovation which leads to executives starting innovation initiatives within their groups – ideas get generated and discussed. Enthusiasm builds up among the technologists but very soon the momentum is lost. The key reason is that the innovation initiatives at the ground level are not getting aligned to the strategic goals of the IT group. To overcome this problem, first innovation should become a key part of the agenda of IT. IT executives must re-think their value proposition to focus on innovation and IT management should add new capabilities on :
- How to partner with business to identify problems, prioritize projects, and drive innovation together?
- How to incubate ideas?
- How to re-design the governance of IT with focus on innovation?
The bottom line is imbibing innovation capability within IT is important to the success of the digitization initiatives in banks and successful banks will be those that connect the pieces of the innovation puzzle to create a new agenda.